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Getting health insurance on your own

Buying a health insurance policy on your own? Watch your step. Individual health care plans are pricey and rife with traps and loopholes.

"The individual marketplace is a very perilous marketplace, and a very expensive marketplace," says Trudy Lieberman, director of the Center for Consumer Health Choices at Consumers Union.

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A health plan that seems like a good deal on the surface may not be much of a deal at all once you study the fine print. Finding a policy to fit your needs and your budget will take some work.

First you need to realize that an individual health care plan will cost you a whole lot more than a group insurance plan offered through an employer.

With an employer plan, the employer may pay half or two-thirds or more of your premium, with the rest coming out of your paychecks bit by bit. Employees in a group plan all pay the same rate for coverage regardless of their age, health and medical condition. Premiums paid by healthy employees help pay the claims made by employees that get sick.

With an individual health care plan, the full cost of a premium comes out of your own pocket.

"If you're buying a policy in the individual market, there's no one subsidizing you, so you're on your own," Lieberman says.

Discrimination abounds
An individual health care policy is priced to reflect your age, health and medical condition. You'll need to submit a detailed medical history, and in some cases pass a physical exam before you'll be approved for coverage.

The younger and healthier you are, the cheaper your premiums are likely to be.

But if you have any type of medical condition, including asthma or even hay fever, you may have trouble finding affordable health care on your own. Insurers could jack up your premium anywhere from 20 percent to 100 percent, all because you have a medical condition that may require care in the future.

And if you have a more serious medical condition such as diabetes, cancer or heart disease, there's a good chance you'll be turned down for coverage altogether.

It all comes down to how the insurance company views your particular medical condition.

Let's say you have asthma. An insurance company may charge you a higher premium, refuse to cover any treatments for asthma for a year or more, refuse to cover treatments for asthma at all, refuse to cover problems with your lungs; or refuse to cover problems with your entire respiratory system. An insurance company can also flat out refuse to cover you.

"They can do what they want," Lieberman says. "All this is an attempt to minimize what they pay."

That's why if you have any kind of medical condition that requires continual care, it's a good idea to stick with an employer plan as long as you possibly can. That way the treatment you need is sure to be covered.

Options when you're laid off
And if you're laid off or leave your job, you can continue with your former employer's plan for you and your family for up to 18 months, thanks to a federal law called COBRA (Consolidated Omnibus Budget Reconciliation Act).

The catch? You'll need to pay the full cost of your old health care policy, plus a 2 percent service fee, out of your own pocket. You could wind up paying several hundred dollars a month for your health care policy. For more information on COBRA, check out this article from

While COBRA is certainly a sound, if expensive, health care option, people in their twenties or thirties that are in good health may be able to find a more affordable health plan by shopping around.

"If you're young and healthy, you ought to be able to do better than that on the outside," says Pat Schoeni, executive director for the National Coalition for Health Care.

Cull carefully
But you'll need to shop carefully. Individual health care policies come in all shapes and sizes with a wide variety of prices. You'll also need to wade through various exclusions and limitations as you weigh each policy.

"Every policy is different. Every premium is different," Schoeni says.

-- Posted: Dec. 2, 2003




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